The Allahabad High Court has upheld the Uttar Pradesh government’s new excise policy, dismissing multiple writ petitions challenging the revised allocation system of liquor shop licenses through an e-lottery process. The judgment, delivered by Justice Pankaj Bhatia, addressed key issues of legitimate expectation, retrospective application of rules, and property rights under Article 300A of the Indian Constitution.
Background of the Case
A series of writ petitions were filed by various liquor shop licensees challenging the Government Order dated February 6, 2025, and the subsequent amendments to the excise rules notified on March 3, 2025. The petitioners, who had been operating liquor shops under previous policies since 2018, contended that their licenses, renewed annually, gave them a legitimate expectation of further renewal.
The petitioners also opposed Clause 5.15.2.2(1)(ga) of the new policy, which mandated the confiscation and destruction of unsold liquor stocks upon expiry of licenses without any compensation. The government defended its decision, asserting its exclusive rights over liquor trade regulation and contending that there was no fundamental right to trade in alcohol.
Legal Issues Involved
Legitimate Expectation & Renewal Rights: Petitioners argued that their past renewals entitled them to a continued right to operate under the previous system. The state countered, citing Section 36A of the U.P. Excise Act, 1910, which explicitly denies any automatic right to renewal or compensation upon non-renewal.
Retrospective Application of the Policy: The government implemented the amended rules on March 3, 2025, after initially introducing the new excise policy in February. The petitioners contended that the law in force at the time of issuing the tenders should prevail, while the state argued that policy changes before license issuance were legally valid.
Right to Property & Confiscation of Liquor Stock: Petitioners claimed that the clause allowing the government to seize and destroy their remaining stock without compensation was a violation of Article 300A of the Constitution. The state, however, assured that it would reconsider this provision at the cabinet level.
Discriminatory Exclusion of Premium Retail Vends: The petitioners argued that the policy unfairly exempted Premium Retail Vends of Foreign Liquor, violating Article 14 of the Constitution. The government justified the distinction based on separate regulatory frameworks for different categories of liquor shops.
Court’s Decision and Key Observations
The High Court, relying on precedents set by the Supreme Court, rejected the arguments of the petitioners, reiterating that:
No fundamental right exists to trade in liquor, as per Khoday Distilleries Ltd. v. State of Karnataka (1995) 1 SCC 574 and other landmark judgments.
Legitimate expectation does not override statutory provisions and can be altered by policy changes.
The state has the power to regulate liquor trade and allocate licenses in a manner it deems fit.
Confiscation of liquor stocks without compensation may require reconsideration, but the government’s assurance to re-evaluate the clause was taken on record.
Justice Pankaj Bhatia, in his judgment, observed: “A citizen cannot claim a fundamental right to trade in liquor. The state has absolute authority to regulate, prohibit, or alter policies governing intoxicants in public interest.” He further stated that “Policy decisions are not subject to judicial review unless proven to be arbitrary, discriminatory, or unconstitutional.”
Representation in Court
The petitioners were represented by prominent counsels including Shri Manoj Kumar Dwivedi, Shri Shobhit Mohan Shukla, Shri Anurag Kumar Singh, Shri Rohit Jaiswal, and Shri Abhishek Singh. The state was represented by Dr. L.P. Mishra, assisted by Additional Advocate General Shri Anil Pratap Singh, Chief Standing Counsel Shri Shailendra Kumar Singh, and other state law officers.
